Q2 details Infrea delivered a mixed report with higher sales and lower adj. earnings vs. ABGSCe. Sales came in at SEK 636m (+5% vs. ABGSCe), +8% y-o-y of which +8% organic (ABGSCe +5%, +29% Q1'25), driven by good order intake in Land & Construction. Adj. EBITA grew SEK 8m y-o-y to SEK 26m (-13%, SEK -4m, vs. ABGSCe), for a margin of 3.6% (ABGSCe -5%, 3% Q2'24) driven by negative project revaluations in L&C. Looking on y-o-y development, L&C turns from negative profitability to a zero result, and we also see positive development in paving services. The positive development in L&C is mainly due to improvements companies in which Infrea had invested extra effort, demonstrating their ability to turn companies around. There is a one-off from the divestment of Mikaels Grävjänst (SEK -3.2m).
Estimate changes and outlook Looking ahead, management does not provide a formal outlook. However, they acknowledge that the market remains weak and challenging, particularly in L&C. Management commented that this is due to fierce competition and an unhealthy pricing environment in some areas. We expect estimates for '25e-'27e adj. EBITA to be mechanically lowered by 5-10% as there is increased uncertainty in the L&C segment.
Final thoughts A mixed report that exceeded expectations on sales, but a bit lower on profitability. The share has performed inline with the broader market into numbers (4% L1M vs. OMXSGI 5%) and is trading at 10-6x EBITA '25e-'27e. We believe the market will focus on the positive development in paving services but also on the uncertainty from project revaluations in L&C.